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Canada, EU close to sealing trade deal with concessions on cheese, beef

Thursday,October17th,2013

Canada and the European Union are preparing to seal a far-reaching trade agreement, a deal that would give beef farmers and other Canadian businesses greater access to a market of 500 million consumers but is drawing the ire of this country’s vocal dairy lobby.

Stephen Harper is jetting to Brussels Thursday to finalize the agreement with an official ceremony expected Friday, a political achievement the Conservative Prime Minister has been pursuing for years to demonstrate his trade-reliant economic strategies are bearing fruit.

Government sources said Wednesday that Ottawa has struck the “political framework for a deal” and has been seeking the consent of all provinces before finally agreeing to the package. After news broke of the tentative deal there was no noticeable opposition from provinces – many said they were still reviewing it – but Mr. Harper’s trip plans suggest he feels confident of avoiding a major backlash from premiers.

The development follows a recent breakthrough in long-running talks where Ottawa agreed to more than double the amount of European cheese that can enter this country without facing steep tariffs, a measure it accepted in return for greater access to the EU market for Canadian beef.

The politically powerful Canadian dairy lobby, however, is accusing the Harper government of selling out farmers in the process and warning they will aggressively oppose this agreement. The Dairy Farmers of Canada represents about 12,500 members and their sector is largely insulated from foreign competition, owing to steep duties on imports that exceed 200 per cent.

“This is a blow to our industry,” dairy farmer Peter Ruiter, who lives south of Ottawa, said. “Every block of cheese you buy – there’s a Canadian dairy producer behind that, making a living and supporting their local community.” Giving European cheese makers more tariff-free access, he said, means “they’re going to bring in the higher-class cheeses … cheeses they’ve had hundreds of years to perfect.”

The details of the agreement have yet to be released, but it includes guaranteed access to European markets for tens of thousands of tonnes of Canadian beef, a key objective of the Conservative government, which wanted to balance off concessions on European cheese.

John Masswohl, director of government and international relations for the Canadian Cattleman’s Association, said the access negotiated for Canadian cattle products is worth about $600-million per year in new exports. Some of the access will be phased in over time, he said.

The agreement is expected to grant Canadian and EU firms more rights to bid on government procurement contracts in their respective jurisdictions, and also to effectively lengthen patent protection for brand-name medicine in Canada.

Auto-assemblers will also gain better access to the European Union market.

Government sources said that Canadian negotiators have agreed to double to about 30,000 tonnes the annual amount of European cheese that can be imported into Canada each year on a tariff-free basis.

NDP Leader Thomas Mulcair signalled he’s girding to fight the deal on the grounds it would allow in more than 13,500 additional tonnes of European cheese each year, a development that threatens, at least, to crowd out Canadian product.

“I am very concerned that Stephen Harper will be throwing Canadian dairy farmers under the bus on this one,” Mr. Mulcair told reporters Wednesday. “If he sells out Canadian dairy farmers, having promised that he wouldn’t fool around with Canada’s system that has protected dairy farmers for years, then there’s going to be a hell of a price to pay.”

A Canadian government source said the total tariff-free access for EU cheese would represent “a very small percentage of current domestic consumption.”

Canadian business is lining up behind the deal, and on Wednesday urged provinces to signal their approval.

Jay Myers, president of Canadian Manufacturers and Exporters, wrote an open letter to premiers asking them to support the deal.

“The agreement is important because it opens markets for small businesses looking to export goods and services, invest, and commercialize new technologies in Europe and other markets around the world,” Mr. Myers wrote.

“The most modest economic analysis of the Comprehensive Economic and Trade Agreement indicates that 80,000 new jobs could be created for Canadians by Canadian exporters as a result of the deal.”

The Conservative government was publicly mum Wednesday on whether a deal had been reached but Mr. Harper used his Speech from the Throne to signal an agreement is near.

“We will soon complete negotiations on a Comprehensive Economic and Trade Agreement with the European Union,” Mr. Harper told MPs Wednesday.

An EU trade spokesman would only say Brussels hopes to clinch a deal shortly.

“Discussions are indeed continuing at the highest level between the EU and Canada towards a comprehensive free trade deal (CETA) – with the hope to conclude the negotiations in the coming days,” EU trade spokesman John Clancy said in an e-mail.

A spokeswoman for the Quebec government refused to comment, stating the negotiations are continuing.

Mélanie Malenfant, who works in the office of Finance Minister Nicolas Marceau, said that Quebec City is “not seeking a deal at any price.”

“The negotiations must be in the interests of Quebec and Quebeckers,” she said. “We will let the negotiators do their work.”

This long-delayed deal, which was supposed to be completed by 2012, would be Canada’s biggest since the 1988 Canada-U.S. free trade agreement.

The B.C. government welcomed the tentative trade deal. In a statement Wednesday, Teresa Wat, the minister for international trade, said her government has been an active participant in the negotiations, and expects the deal to deliver economic growth and job creation in B.C.

Ontario Premier Kathleen Wynne’s office confirmed that the government got the details of the agreement Tuesday and is examining it before deciding whether to back the trade pact.

With reports from Jane Taber in Halifax, Sophie Cousineau in Montreal, Adrian Morrow in Toronto, Carrie Tait in Calgary and Justine Hunter in Victoria